On Tuesday, Phillip Securities initiated coverage on Data Patterns India Ltd (DATAPATT:IN) with a Buy rating and a price target of INR 3,400.00. The firm sees Data Patterns as a key player in the defence and aerospace electronics sector, which primarily serves India's indigenous defence products industry. The company has built a strong position in the highly specialized defence electronics segment, thanks to its technical expertise, wide-ranging product portfolio, and significant moat in radar technology.
The analyst at Phillip Securities highlighted Data Patterns' strategic shift from working under the Defence Research and Development Organisation (DRDO) model towards developing proprietary products. This move is expected to further solidify the company's market presence and accelerate the conversion of production orders into sales. Data Patterns' competitive edge is believed to be strengthened by these strategic initiatives.
Phillip Securities forecasts a 26% compound annual growth rate (CAGR) in earnings per share (EPS) for Data Patterns from the fiscal year 2024 to 2027. This growth projection is supported by the company's strong return on capital employed (RoCE), which averages 18%, and a healthy balance sheet. The target price of INR 3,400 is based on a December 2026 price-to-earnings ratio (PER) of 55 times.
The analyst's positive outlook on Data Patterns is underpinned by the company's solid competitive edge in the defence electronics market. With multiple strategic initiatives underway, the firm is anticipated to strengthen its franchise and see an accelerated translation of production orders, which is expected to drive significant growth for the company in the coming years.
In conclusion, Phillip Securities' initiation of coverage on Data Patterns with a Buy rating reflects the firm's confidence in the company's growth trajectory and strategic direction. The price target of INR 3,400 suggests a bullish outlook for the stock, backed by strong fundamentals and a promising future in the defence and aerospace electronics industry.
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